5 Stocks Approaching Greatness

Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?

The stars' walk of fameOn Motley Fool CAPS, these opportunities can be found among our four-star stocks. In CAPS' proprietary ratings system, they rank higher than most of the other 5,400 rated companies, but they're just shy of superstardom. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star companies approaching greatness. Here are a handful.

Some of these names might surprise you. For example, SanDisk has been a leading NAND Flash memory card maker for years, and along with the CAPS community, analysts are waking up to its potential and boosting their outlook. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold.

In the sight of greatness?Speaking of going against the grain, if you took a look at Dean Foods' stock price, you'd assume investors would be thinking less of the milk company's prospects rather than more, but the CAPS community has been keeping its rating at elevated levels.

The stock has fallen by almost 60% so far this year, giving Dean Foods a forward P/E of less than 9, third-quarter profits fell by half year over year because butterfat expenses rose and because of lower prices for store-brand milk. The company is not alone in feeling the effects on its margins: Operating margins at meat products company Tyson (NYSE: TSN) contracted 4.5% in the fourth quarter and were off by 140 basis points at Kraft.

Dean Foods had a bad quarter earnings report and immediately dropped 28% to a fresh 52-week low. With a P/E of 8 and a strong market share, DF is very attractive at this price (under $8). The fundamentals are still there, and this stock should get back to the $11-$14 range in the next 4-6 months.

Although the company doesn't appear to be a bargain, based on enterprise value-to-free cash flow, higher input costs are an industrywide concern. Lifeway also reported a 41% decrease in operating income in its latest quarter, which indicates to me that Dean Foods can rebound from this. So head over to the Dean Foods CAPS page and check out the community's insights.

There's a lot of competition for a moviegoer. Not only do RealD and Dolby Labs offer a 3-D experience, but there are also streaming movies from Netflix (Nasdaq: NFLX) and video on demand. CEO Richard Gelfond says IMAX differentiates itself from the field by being able to cherry-pick the titles it will feature. So it's getting a cut of the box office from both the movie studios and the theaters themselves. And to counteract any particular threat 3-D television might offer, IMAX has also launched a 3-D channel.

It's that all-encompassing, industry-leading mind-set that attracts investors such as CAPS member Mark85K.

3-D is the future of movie [entertainment]...IMAX CORP is one of the best in the sector and its revenues are growing..constantly.

Not sure if IMAX is the right size for you? Add the stock to your watchlist to get all the Foolish news and analysis aggregated for you.

A big opportunityA looming deadline to cash in on tax credits for utility-scale solar projects means some investors are thinking Power-One will have its day in the sun. A cash grant paying for 30% of a renewable energy project will expire New Year's Eve, and with Power-One's inverters targeting the solar and wind power sectors, noahchilly says the time is right.

Record Greenhouse gases. Tax breaks for Green Energy. Oil about to spike again... The time is near! The Green Revolution is here!

A great opportunity for youSome investors suggest these four-star investments still seem to be on their way to five-star greatness, but it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.

Sign up today for the completely free service and let us hear what you have to say about the great and almost-great companies that interest you.

IMAX is a Motley Fool Rule Breakers recommendation. Dolby Labs and Netflix are Motley Fool Stock Advisor selections. The Fool owns shares of Power-One. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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People forget where Dow Chemical came from, or perhaps they never knew. Upon graduation from Case Western Reserve, the company's founder went prospecting for salt water in Michigan, and found it. That's why Dow is from Midland, Michigan.

I don't see Gulf Resources over taking Dow in the specialty chemicals business, but they don't have to for me to want to hold the stock. It's a very good business, in Michigan or China.

I didn't buy Gulf Resources for the refining end of the business, I bought it for the exploration, and production of brine end of the business. I got the refining part for free. The company is still a buy.

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